Secret Government of Alberta documents show upgrading is economic

AFL releases Energy Department analysis obtained under FOIP

Edmonton – In-province upgrading is highly economical according to secret government documents released by the Alberta Federation of Labour today.

The documents, obtained by the AFL under the Freedom of Information and Privacy Act, include a Department of Energy analysis that deals with the economics of the energy industry. This analysis of taxes, royalties and upgrading policy was deemed ‘secret’ by the Government of Alberta.

“These documents paint a picture of a Government that knows what needs to be done, but is afraid to act,” Alberta Federation of Labour president Gil McGowan said. “This ‘bitumen bubble’ has a silver lining, and the province knows it – they wrote the documents to prove it. Now they just need to have the courage to follow through on the evidence of their own research.”

The internal government documents show that as the light-heavy oil differential expands, integrated oil sands mining projects – those with upgraders – become hugely profitable. Integrated mining operations (bitumen extraction with upgrading to Synthetic Crude Oil) are realizing unprecedented returns under the current conditions.

“The economics of upgrading depends on who you ask,” McGowan said. “If you are asking the companies who want to rip and ship our raw resources, then the answer will always be ‘upgrading doesn’t make economic sense.’ But if you ask Alberta taxpayers, or energy-sector workers, or even integrated oil sands mining companies – then yes, upgrading is highly economic.”

The Government of Alberta continues to approve in situ oil sands projects without requiring associated upgrading, which is flooding the US market and driving down the price.

“These projects become less economically viable as the price difference between bitumen and crude expands,” McGowan said. “And yet these projects have mushroomed throughout the province. We’re flooding the market, and these documents show that the government knows it.”

The Alberta Federation of Labour has spent several months seeking to access these documents, and has spent thousands on government fees through the Freedom of Information and Privacy Act.

“There’s no reason other than politics to keep these documents secret,” McGowan said. “These documents are crucial to the debate over the budget, and it was a disservice to voters to keep them in the dark about this research.”